Liners but hes a chaos candidate and he would be a chaos president. He would not be the commander and chief we need to keep our country safe. Congressional leaders and white house agree funding the government until september and avoiding a shutdown. Good morning, everyone. It is day two of the fomc meeting and were counting you down to one of the most highly anticipated market events. Ahead of that lets go through one of the asset classes. What were seeing is a tiny bit of vying but not too much. Cac 40 up by. 5 . Only a little bit of under performance and this follows a sharp rise in yesterdays trading session. They jumped by roughly 3 . Were seeing quite a bit of volatility on this side of the pond too. U. S. Futures are indicating a higher start to the trading session. A little bit more positive than an hour ago. The nasdaq, s p and dow jones up by. 3 each. This is after session highs in yesterdays trading session but still racking up nice gains around 0. 9 . All s p 500 sectors in the green with energy and financials leading in part because we did see that continued bounce back in oil prices. Now speaking of the commodity complex lets show you what we are. Were seeing wti crude pulling back once again. Now 37. Brent crude at 37. 68. That spread narrowed dramatically over the last couple of months. Brent crude off by 2 after yesterday we did see that bounce back but i guess that wasnt very long lived. Spot gold up by. 5 at 1065. Also quick check on the u. S. Yield curve. It has been flattening and the two year treasury note yield at less than 1 . Thats obviously the sensitive rate but the 10 year treasury note still fairly low compared to what a lot of people were expecting. 2. 69 . You can expect that would be closer to 2. 5 or 3 when the fed gets ready to hike rates. A little bit of flattening though we did see that yield on the back of the better than expected cpi data yesterday. Last but not least what zero dollar is doing. 10922. Unchanged on the day. But the dollar position pointed to the bank of America Meryl lynch. Still three times more crowded than any other trade out there. Thats quite telling isnt it. That will largely depend on the decision but exactly what janet yellen depends on the decision. The fomc data. Markets continue to price in a hike but its the price that remains contentious. We take a look at the split here, it will all determine on whether or not this will be a dovish hike if the hike comes today. Wall street expects three more rate rises in 2016. Thats according to a median forecast in the latest cnbc fed survey but as you can see from this chart opinion remains divided among various analyst calls. Now a third expects just two hikes. The same expects as many as four taking place next year but 21 are look at three and fed chair janet yellen will out line the strategy. She believes a strategy can be reached and sought to calm concerns about the pace of tightening once the fed makes its first move. Speaking earlier this month at the Economic Club of washington yellen underscored the risks of waiting too long to raise rates. Where the fomc to delay the start of policy normalization for too long we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals. More over, holding the federal funds rate at the current level for too long could also encourage excessive risk taking and thus undermine financial stability. Joining us now is strategist investment. We just heard janet yellen speaking about the risks of waiting too long. Do you think theres a risk of the fed going too early. Im more concerned about this inflationary pressure. Were talking about not meeting the expectations for the last four years. You have seen a report about the whole middle income. Its shrunk first time in a minority compared to 1970. The Largest Cycle points to disinflation and my view is that lets say fed doesnt go now and it makes a mistake it can always go next time but if you go now and then if you have it you cant put the same thing back the way you did now. So i would earn more in the signs that im not concerned about inflation. If theres a concern about inflation its that we dont have one. Thats a failure on the part of the central bank. And not just the fed. Is it realistic to assume through qe through the stimulus that the Central Banks can still reach inflation of 2 . I doubt it. What you have done is why i keep coming back to the whole middle income. The middle income really supports the growing growth of the economy and asset price. Of course fed by itself cannot do everything. You have seen what has been missing. I dont see you get one in next year because it comes only in 2017. So i have a feeling that people pricing them up next year were disappointed. So bear in mind your assumptions rather dovish hike on the cards. How should investors be positioning themselves . Is this still upside to the equities. We have seen it in the last couple of weeks. Dollar strength is not my scenario. Its going to give balance and then you would see some rally because its up 9 over the last ten days. What about the dollar index . I was pointing to some of the positioning were seeing in the dollar. Its still one of the most crowded trades out there in any of the asset classes. How much further will the positions have to be paired back to actually make sense to a lot of investors . I think it will probably get paired back more but we live in the world of shorttermism. Between middle east and thinking everything is sort. Same with inflation. I think youre going to have outside balances and then you see 4 moving in index. That shows you what its about. I think a lot of these will be paired down. Thank you so much. Strategist at head of investments at cross bridge capital. Its hard to believe but its not just about the fed today . What . Its not. Surprised to know that but well give you a run down of what else to watch this tading day. Theres a few pieces ahead of that crucial decision. November Housing Starts are released at 8 30 a. M. Eastern expected to have rebounded last month. At 9 15 november Industrial Production predicted to draw for a Third Straight moresing concerns about the strength of 4th quarter. Joy global before the opening bell and fed ex and oracle after the close. Still to come on the close, Luxury Fashion is seeing a slow down. We get the latest view from the cat walks of milan. Thats next. Dont want to miss it. You cant predict. The market. But at t. Rowe price, we can help guide your investments through good times and bad. For over 75 years, our clients have relied on us to bring our best thinking to their investments so in a variety of market conditions. You can feel confident. In our experience. Call a t. Rowe price retirement specialist or your advisor. To see how we can help make the most of your retirement savings. T. Rowe price. Invest with confidence. While youre watching this, im hacking your company. Grabbing your data. Stealing your customers secrets. Theres an army of us. Relentlessly unpicking your patchwork of security. Think youll spot us . You havent so far. The next wave of the internet requires the next wave of security. Were ready. Are you . Thats why i switched from uverse to xfinity. Now i can download my dvr recordings and take them anywhere. Ready or not, here i come whispers now hideandseek time can also be catchuponmyshows time. Here i come cant find you anywhere dont settle for uverse. X1 from xfinity will change the way you experience tv. These are the headlines. Investors counting down to the fed decision with the dollar and european Stocks Holding steady. Candidates square off in the last debate of 2015 with jeb bush going after donald trump. They agree a massive tax and spending plan to avoid a midnight shutdown. Now anything coming from donald trump is always very entertaining so i dont want to keep this from you. The Trump Organization says the u. K. Court decision on the golf course shows the scottish governments foolish, small minded mentality and that Court Decision was the britains top court. They have rejected trumps bid to stop wind farms near the scottish golf course. Now scotland has heavily criticized mr. Trumps proposing for a ban coming to the United States last week and he has really received foit. They ordered the top Court Decision to approve the scheme was actually flawed. So very harsh wording coming from the trump camp here and the reasoning, trumps reasoning was that those 11 offshore turbines on the northeastern coast of scotland, they would spoil the view from the nearby greens of the multimillion dollar golf complex. Never one to shy away from criticism there. Those that disagree with him. Not a huge surprise but strong statements from mr. Trump. Meanwhile u. S. Congressional leaders and the white house reached a deal on a massive tax and spending deal that will fund the government through september. That avoids a possible shutdown at midnight. House Speaker Paul Ryan is urging federal republicans to support the measure such as delaying portions of obamacare but also includes many priorities for the democrats as well. Thousands and senate are expected to pass the bill by the end of the week. As part of that tax and spending bill Republican Leaders agreed to lift the ban on u. S. Oil expor exports. Congress must still pass it and president obama must sign it into law. Now lifting the ban has been a key issue for republicans and the oil industry. But the deal would also adopt environmental and renewable measures sought by democrats including wind and solar tax credits. Now mexico auctioned all of the 25 exploration fields on offer in the countrys latest oil tender. Its a step forward in the privatization of the oil industry. They confounded fears that the falling price of mexican crude. The largest bidders in the field lost out to smaller players. Peak Oil Production is expected to reach 77,000 Barrels Per Day and attract 1. 1 billion in investment. U. S. Antitrust regulators arent satisfied with offers to win approval for the merger and may seek more. Theyre extending the deadline for closing the 26 billion deal for april 30th. They will continue discussions with the justice department. And has launched a legal action and baker hughes pushing higher by 1. 2 . Shares in prada sharply lower in hong kong at one point hitting a record low. This after they missed forecasts. The luxury italian retailer was also hurt by a stronger dollar in the United States. Claudia is in milan with more details. What are the Key Takeaways here. Yes, well, good morning, we are certainly seeing a slow down in china. Theres no question that this is happening. Sales did fall by 38 in the Third Quarter due to the slow down in china. But overall for the full year we are still seeing or actually for the first nine months were still seeing prada in positive territory. They were up by 1. 2 but this Third Quarter is putting in focus the luxury sector because it is also coming out as we are entering this very important quarter. So it will be interesting to see what happens in february since we hear out from the luxury operators including prada. As far as prada is concerned to face the slow down in terms of high cost it will be the slow down opening of stores. They have 600 stores that doubled in number in the last five years so thats one thing theyre going to do as well as closing down some stores that they do have. Of course they are going to continue to try and increase the attractiveness of the brand of their products and the ceo of the group says they will not slow down on investments. So theyre not willing to do that so cutting cost is not going to be easy for prada and not easy in the luxury sector. So well continue watching this stock as well as the luxury sector overall. Thanks for that. Prada not the only high end retailer taking a hit. Theres been a number of cuts in the luxury space today. Hsbc lowered its price target on burberry to 1,500. However weaker momentum is not structural. If we could take a look at how shares are trading off 0. 4 in london but if you check out the 30 day move off nearly 10 . Rbc trimmed its price target to 16 euros to 18 euros. Partly driven by warm weather will lead to weaker performance in the fourth quarter. Quick check of shares of monc monclear. Millennials are finding it tough to get on the property ladder. What it takes for them to get through the door. Next after this short break. Nsh. Well, the fed countdown is fully underway with a decision in just under nine hours now and the fomc is widely expected to raise rates. Kayla explores the impact on the financial sector. Theres a whole sector of ways a rate hike would impact banks. On the good side theyll be incentivized to lend out the deposits and reinvest them at higher rates and portfolio values could go up too. They will have to dish out higher fees to account holders and to some Fund Managers and more expensive loans on the consumer side. Theyll have to set aside more money for potential fault. It will pen fit them and if you were to pay a bank trade know that these banks will benefit to different degrees. Most banks laid out how a 100 basis point rate hike will layout their net income. It will rise more than 11 . Jp morgan about 7 . Citi 4 and barclays estimates Morgan Stanley will rise about 4 as well. They actually dont break out this number and the regionals which a lot of people are playing actually have a lot of Energy Exposure too which is another tough variable to solve for. These earnings wont happen overnight and there could be an added wrinkle. They have actually taken way down the earnings estimate for these banks. And history does show the trade pays off. They generally sell off in the week following a first rate hike. Theyve had four of those in recent history but if you play it six months to year after those are some pretty, pretty sizable returns that will have investors and financials seeing green at least according to our data. If youre willing to be patient which you would probably have to be to see that 100 basis point rise since it will after all be gradual it could be finally a winning trade. Back to you. U. S. November Housing Starts are projected to rebound from a disappointing october that saw Housing Starts shrink by 11 . Starts hit the lowest number since may and were well below Market Expectations but the bigger question is really how is the u. S. Housing market going to fair in the face of a lift off in rates . Squoini joining us live from miami is jeff taylor. Thank you so much for getting up early for us. Theres probably no other sector thats benefitted as much as the housing sector from the low Interest Rate environment. Currently 30 year Mortgage Rates are at around 4 in the face of tightening are they going to be rising to above 6 again . 5 . I dont think i think well see 5 in 2016 and most interesting as we see the rate probably rise about. 25 what were going to see in 2016 is i think the strengthening of the purchase market. I find it a little counter intuitive but what youll see after the first rate increase is people sitting on the sidelines saying do i really want to buy a house . Theyll probably go into the market and look for the first time home purchase. People thinking about listing their house are going to go ahead and list their house so well actually see a spike here in the next, maybe in early spring type Housing Market in the next four months and then in a second rate increase hike which will come probably sometime in spring youll probably see some of the markets start to stabilize as far as housing goes. Youre going to see much more focus on a purchase market in that refinance market start to sell off since we havent had a hike in over ten years. We are going into the election season next year. Do we actually know what the republicans versus the democrats have planned in terms of housing . I know that both were partly to blame for the demise of the government funded agencies. So do we know what the policies actually look like . You know, thats a huge question and i dont think anybody has a clear answer to exactly what theyre going to do. But what i will tell you is the books that are being originated are are the cleanest in history. The delinquency rates are the lowest in history. So many aspects if its not broken are really hard to fix. So i think theres not a clear plan out there right now but that will certainly be the main topic of discussion as you head into the next election four year cycle. And jeff, presumably theres still a reluctance from politicians to push new Home Ownership like the days we used to see but youre seeing a bit of demographic challenge and the trend were seeing with millennials being more reluctant is that to suggest theres deals being found outside of the main urban areas. Also as you see the rate increase youll see the banks start to realize we just lost that huge refinance stream. How can we get more creative with prudent lending thats going to target specifically the millennials and how they can afford it. They may still be a little bit tight but i think theyll hook to the suburbs and affordable housing. Youll see a lot of the big banks coming up with morgan products to see their needs going forward. Especially in the second half of 2016. Does that trend then really create additional head winds for the Home Builders themselves considering how it takes place out of the main urban centers as well. I think they have it pegged down. They are really filtering toward that move. I think the Home Builders are in good shape but its location, location, location. Are they buying in the cities where they feel confident about their job where is the jobs are growing in San Francisco and new york and if theyre going to the suburbs they have to make sure that they have the demand directly out there. So